Largest fine on record for caviar smuggling case: Maryland U.S.A.

On Feb. 20, 2001, U.S. Caviar & Caviar, Ltd., a major American supplier of that high-priced culinary delicacy, was fined $10.4 million, the most ever in a wildlife trafficking case - and Hossein Lolavar, the company's former owner and president, was sentenced to serve 41 months in prison by Judge Alexander Williams in federal court in Greenbelt, Maryland in connection with a U.S. Fish and Wildlife Service investigation of illegal caviar trade. In July 2000, U.S. Caviar pleaded guilty to 22 federal charges and Lolavar to 12, including multiple felony counts of conspiracy, smuggling, making false statements, submitting false wildlife records, and mail fraud, as well as violations of the Endangered Species Act and Lacey Act - a federal wildlife protection law that prohibits the false labeling of fish and wildlife imported, exported, or transported in interstate and foreign commerce.

Also sentenced were U.S. Caviar sales manager Faye Briggs, who also ran a caviar label-making business at the company's Rockville, Maryland, headquarters, and Ken Noroozi, the president of a caviar export firm operating out of the United Arab Emirates.

Briggs will serve 21 months in prison and Noroozi 15 for their participation in a five-year smuggling operation that involved caviar with a retail value of more than $7.5 million, one of the largest value wildlife trafficking schemes ever uncovered by the Service.

"Three years ago, nations around the world took steps to protect sturgeon and paddlefish because over harvest for the caviar trade was depleting fish populations," said Acting Service Director Marshall Jones. "This case shows that some segments of the caviar industry not only ignored those protections, but deliberately defrauded the public in the process.

" U.S. Caviar, which claimed to be one of the Nation's largest importers of sturgeon roe from the Caspian Sea and counted airlines and gourmet grocery chains among its customers, admitted importing tons of black market caviar from the United Arab Emirates using forged Russian caviar labels. The labels, which caught the eye of a Service wildlife inspector clearing shipments at Baltimore-Washington International Airport, made it look as if the roe had been produced and exported by a large, legitimate Russian caviar supplier. However, it had actually been smuggled out of Russia or other countries bordering the Caspian Sea. The forged labels were produced at U.S. Caviar's Rockville headquarters, where at least 5,000 were manufactured. They were sent to the United Arab Emirates for use on shipments destined for the United States.

The company and its co-defendants forged wildlife documents, including Russian health certificates, to further authenticate their shipments. The shipments were also accompanied by false permits, customs documents, invoices, and packing lists. In 1998 alone, U.S. Caviar imported some 18,000 pounds (9 tons) of caviar from the United Arab Emirates with false labels and documents.

U.S. Caviar smuggled real beluga caviar - a Caspian Sea variety that ranks as the world's most expensive - into the United States by labeling the tins as less valuable caviar, filing false declarations, and using false invoices understating the value of the caviar to avoid paying the higher customs duty required. Lolavar, Briggs, and their company also operated a domestic mail fraud scheme that sold eggs from domestic paddlefish and shovelnose sturgeon (commonly called hackleback) to U.S. customers as authentic Russian sevruga caviar, also a highly prized Caspian Sea roe.

DNA tests conducted by the Service's National Fish and Wildlife Forensics Laboratory in Ashland, Oregon, showed that the purported "Russian" caviar sold by the Maryland company did not contain eggs from Caspian Sea sturgeon species as claimed but instead originated from paddlefish and hackleback, fish native only to North America.

Declines in sturgeon and paddlefish populations worldwide prompted the member nations of the Convention on International Trade in Endangered Species (CITES) to regulate global commerce in these fish and products made from them, including caviar. Under trade controls that went into effect in April 1998, companies dealing in caviar must obtain export permits from the country of origin or re-export certifying that the fish were taken legally and that trade represents no threat to the survival of wild populations. To be valid, permits must also correctly identify the fish species from which the roe was harvested as well as the country where the fish were caught.

"When the permit or label says Russian caviar, that's what should be inside," said Jones. "Fraudulent trade cheats the public, circumvents global trade controls that protect sturgeon, and puts new pressures on U.S. fish species that have already vanished from many of our rivers."

The United States is one of the world's largest consumers of caviar. In 1999, the country imported more than 143 tons of the delicacy. The Service's Division of Law Enforcement monitors this trade to uphold global safeguards for sturgeon and paddlefish under the CITES treaty and ensure compliance with federal wildlife protection laws and import/export regulations.

Although beluga, osetra, and sevruga caviars are the most sought-after varieties, the three Caspian Sea sturgeon species that yield these roes - the beluga, Russian (or osetra) and stellate (or sevruga) sturgeons - are increasingly rare in the wild. Over the years, commercial fishing, environmental degradation, and the damming of rivers have driven down populations of these fish. Most beluga sturgeon in the Caspian today come from restocking programs and are not old enough to be harvested for roe. Hatchery production also accounts for portions of the stellate and Russian sturgeon populations.

Fisheries management programs and harvest quotas regulate the legal take of these fish. Conservationists and fishery managers, however, have long suspected that significant quantities of the caviar sold around the world under the beluga, osetra, and sevruga names come either from illegally fished sturgeon or from different species.

Paddlefish and shovelnose sturgeon are commercially harvested in parts of this country. States, however, carefully manage populations to ensure that both commercial use and sportfishing are compatible with long-term conservation. Large-scale commercial catches early in the century and loss of habitat have reduced both the numbers and ranges of these U.S. fish species.

The federal probe of U.S. Caviar & Caviar was conducted by special agents from the Service's Baltimore, Maryland, law enforcement office with assistance from the U.S. Customs Service, Federal Bureau of Investigation, and Food and Drug Administration. The case was prosecuted by the United States Attorney for the District of Maryland.

"We applaud our federal law enforcement partners and the U.S. Attorney's Office for their support of U.S. efforts to protect sturgeon and paddlefish," Jones said. "Putting a stop to illegal caviar trade will be crucial to the continued survival of these fish species."

The U.S. Fish and Wildlife Service is the principal Federal agency responsible for conserving, protecting and enhancing fish, wildlife and plants and their habitats for the continuing benefit of the American people. The Service manages the 93-million-acre National Wildlife Refuge System, which encompasses more than 530 national wildlife refuges, thousands of small wetlands and other special management areas. It also operates 66 national fish hatcheries, 64 fishery resource offices and 78 ecological services field stations. The agency enforces Federal wildlife laws, administers the Endangered Species Act, manages migratory bird populations, restores nationally significant fisheries, conserves and restores wildlife habitat such as wetlands, and helps foreign governments with their conservation efforts. It also oversees the Federal Aid program that distributes hundreds of millions of dollars in excise taxes on fishing and hunting equipment to state fish and wildlife agencies.

Courtesy of the U.S. Fish and Wildlife Service